Food Industry Market | Economics Dissertations

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Chapter 1 – Introduction

1.1 Globalization in Food Industry background

Since last decade, Globalization is a trend in the food industry due to growing potential markets in various developing countries and changing consumption pattern of the people. Integration of international food markets and increasing expansion in international markets of the firms is the most significant trends in global economy. Market liberalization and scientific progress gave rise to globalization. Even though consumer diets are gradually changing globally; there are variations in food shopping patterns around the world which is mostly based on income levels.

The focus of food retailing industry in developing and developed countries was different with respect to consumers and the type of food demanded. The trend was that the developing countries retailers focused on high value food while the developed countries retailers focused on meeting consumer demand with respect to quality, security and choices. Thus various retailers are now looking at exploring new markets and using more opportunities in different kinds of developed and developing markets.

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Retailers have the information regarding the consumer preference and the standard of living which in then applied for research in segmenting the market according to market demand, affordability as well as quality. Hence food retail sectors is continuously growing and making innovative sale systems. The global food retail sale has increased up to $2 trillion yearly and the top 15 global supermarket companies’ account for more than 30 percent of world supermarket sales.

Bourlakis (2004) opines that “The current changes are driving food supply chains to take up coordination between producers and retailers to aid modifying products to meet consumer demands. The food supply chain progressed from series of shorter, independent transfers to more unified, coherent relationship between processors, manufacturers and retailers”.

Lubbers (1997) refer to the term globalization, meaning the global sourcing of raw materials combined with local marketing. Stalk and Hout (1990), Christopher (1992) and Hewitt (1994) suggested that “The keys to long-term competitive advantage in today’s marketplace are flexibility andcustomer response”. To maximize a competitive advantage, all members within the Supply Chain should ‘seamlessly’ work together to serve the end consumer (Towill, 1997).The effects of globalization (i.e. open markets), the market entranceof new competitors, and stricter governmental requirements for food safety and environment friendlyproduction place increasing demands on management.

This study will examine some of the food supply chain models, evaluating it whether the consumer preferences are bringing changes in the global food supply chain model. Further effort will be made to analyze the changing patterns of traditional and evolving model for existing food supply chains and how it affects the sale and demand of foods in the market.

With the introduction of supermarkets in the 21st century more and more traditional grocery outlets have suffered a fall in share from 40 percent in 1995 to 36 percent in 2005 and thus their was rise of supermarkets (Neff 1997a).Thus globalization has come into picture where more and more supermarkets are establishing in various countries due to decline in international trade barriers and more opportunities for investments as well as growth as a multinational.

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